<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14a-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FOUNTAIN OIL INCORPORATED
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FOUNTAIN OIL INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 12, 1996
----------------
To The Stockholders:
The Annual Meeting of Stockholders of Fountain Oil Incorporated (the
"Company") will be held at the Fairbanks Room of the Holiday Inn Select, 14703
Park Row, Houston, Texas 77079, on February 12, 1996, at 10:00 a.m. for the
following purposes:
1. To elect six directors to serve until the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified;
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 25,000,000
to 50,000,000 shares;
3. To approve the 1995 Long-Term Incentive Plan which provides for the
issuance of up to 1,500,000 shares of Common Stock in connection with
the grant of stock options or stock appreciation rights to employees,
directors, consultants and advisors of the Company;
4. To ratify the selection of Coopers & Lybrand L.L.P. as independent
public accountants of the Company for the fiscal year ending August 31,
1996; and
5. To transact such other business as may properly come before the Meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on December 14, 1995,
as the record date for determination of the stockholders entitled to notice of
and to vote at the Annual Meeting.
EVEN THOUGH YOU MAY EXPECT TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE
BE SURE THAT THE ENCLOSED PROXY CARD IS PROPERLY COMPLETED, DATED, SIGNED AND
RETURNED WITHOUT DELAY IN THE ACCOMPANYING ENVELOPE TO WHICH NO POSTAGE NEED
BE AFFIXED IF MAILED IN THE UNITED STATES.
SUSAN E. PALMER
Secretary
January 8, 1996
<PAGE>
FOUNTAIN OIL INCORPORATED
1400 Broadfield Boulevard, Suite 200
Houston, Texas 77084
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
SOLICITATION, REVOCATION AND VOTING OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Fountain Oil Incorporated (the "Company"), in connection with the
Annual Meeting of Stockholders to be held at 10:00 a.m. on February 12, 1996,
at the Fairbanks Room of the Holiday Inn Select, 14703 Park Row, Houston,
Texas 77079, and at any and all adjournments thereof. It is anticipated that
this Proxy Statement and accompanying proxy will first be mailed to
stockholders on or about January 11, 1996.
The accompanying proxy, if properly executed and returned, will be voted as
specified by the stockholder or, if no vote is indicated, the proxy will be
voted FOR each matter specified. As to any other matter of business which may
be brought before the Meeting, a vote may be cast pursuant to the accompanying
proxy in accordance with the judgment of the persons voting the same, but
management does not know of any such other matter of business. A stockholder
may revoke his proxy at any time prior to the voting of shares by voting in
person at the Meeting or by filing with the Secretary of the Company a duly
executed proxy bearing a later date or an instrument revoking the proxy.
The costs of solicitation of proxies will be paid by the Company. In
addition to soliciting proxies by mail, the Company's officers, directors and
other regular employees, without additional compensation, may solicit proxies
personally, by telephone or by other appropriate means. Banks, brokers,
fiduciaries and other custodians and nominees who forward proxy soliciting
material to their principals will be reimbursed their customary and reasonable
out-of-pocket expenses.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record of the Company's $0.10 par value Common Stock as
of the close of business on December 14, 1995 will be entitled to vote at the
Meeting. On December 14, 1995 there were outstanding 10,834,063 shares of
Common Stock, which constituted all of the outstanding voting securities of
the Company, each of which is entitled to one vote per share. A majority of
the shares entitled to vote, represented in person or by proxy, constitutes a
quorum at the Meeting. Abstentions and broker non-votes are counted as present
for purposes of determining the existence of a quorum.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors has nominated six persons to be elected directors at
the Annual Meeting to hold office until the next Annual Meeting of
Stockholders and until the election of their respective successors. Directors
are elected by a plurality of the shares voted; broker non-votes and votes
withheld have no effect on the vote. All proxies received by the Board of
Directors will be voted for the nominees listed below if no direction to the
contrary is given. In the event that any nominee is unable or declines to
serve, an event that is not anticipated, the proxies will be voted for the
election of any nominee who may be designated by the Board of Directors.
The nominees for director are:
<TABLE>
<CAPTION>
Name Age Principal Occupation
---- --- --------------------
<S> <C> <C>
Einar Bandlien 47 Executive Vice President,
Business Development
Robert A. Halpin 60 President, Halpin Energy
Resources Ltd.
Stanley D. Heckman 56 Principal, JSB Services Corp.
Eugene J. Meyers 61 President, GSM
Financial Corporation
Oistein Nyberg 53 President and Chief
Executive Officer
Nils N. Trulsvik 46 Executive Vice President
</TABLE>
EINAR BANDLIEN was elected a Director of the Company on August 17, 1994,
Senior Vice President for Business Development on December 15, 1994 and
Executive Vice President for Business Development on November 14, 1995. Mr.
Bandlien is a petroleum expert with extensive experience in exploration and
petroleum resource management. Prior to joining the Company, he held various
positions with Nopec. a.s., a Norwegian petroleum consultant group of
companies of which he was a founder, including Director of International
Activities from 1987 to 1991 and Chairman from 1990 to 1993. He was a Special
Advisor to Nopec from 1993 to 1994. Mr. Bandlien also served as Executive
Secretary of the Norwegian Petroleum Resource Management Alliance from 1991 to
1993.
ROBERT A. HALPIN was elected a Director on March 4, 1995 and Chairman of the
Board on November 14, 1995. Mr. Halpin has long experience in the oil and gas
industry. From 1989 until his retirement in September 1993, he served as Vice
President for International Exploration and Production with Petro-Canada. In
October 1993, Mr. Halpin became President of Halpin Energy Resources Ltd., a
firm he formed to provide advisory services to energy companies with emphasis
on international petroleum projects.
STANLEY D. HECKMAN was elected a Director on March 4, 1995. For more than
the past five years, Mr. Heckman has been the owner of JSB Services Corp., a
company whose primary business is in real estate development and investments.
EUGENE J. MEYERS was elected a Director on January 3, 1994 and served as
Chairman of the Board from January 3, 1994 to November 14, 1995. He served as
Chief Executive Officer from August 16, 1994 to November 21, 1994 and as
President from September 8, 1994 to November 21, 1994. Mr. Meyers is President
and owner of GSM Financial Corporation. Through such company and other
companies, Mr. Meyers has been involved in real estate development for the
past 30 years.
OISTEIN NYBERG was elected a Director on March 4, 1995 and President and
Chief Executive Officer effective March 9, 1995. From January 1984 to March
1995, Mr. Nyberg was Managing Director
2
<PAGE>
of Smedvig Technology A/S, a Norwegian technology company of which he was one
of the founders. Among other services, Smedvig provides consulting services in
the areas of reservoir evaluation, production drilling and well control.
NILS N. TRULSVIK was elected a Director on August 17, 1994. He served as
Executive Vice President from September 8, 1994 to November 21, 1994 and as
President and Chief Executive Officer from November 21, 1994 to March 9, 1995
when he reassumed the position of Executive Vice President. Mr. Trulsvik is a
petroleum explorationist with extensive experience in petroleum exploration
and development throughout the world. Prior to joining the Company, he held
various positions with Nopec a.s., a Norwegian petroleum consultant group of
companies of which he was a founder, including Managing Director from 1987 to
1993 and Special Advisor from 1993 to August 1994.
INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS
The Company's Board of Directors held nine meetings during the fiscal year
ended August 31, 1995. Einar Bandlien did not attend three of such meetings.
The members of the Audit Committee and the Compensation Committee are Robert
A. Halpin and Stanley D. Heckman. The Audit Committee is responsible for
reviewing the Company's financial statements, audit results, internal
controls, and accounting principles, policies and practices. The Committee
also recommends to the Board the selection of the Company's outside accounting
firm and approves the fees of such firm. The Audit Committee held two meetings
in fiscal year 1995. The Compensation Committee approves the compensation of
the Company's executive officers, oversees the compensation scheme for other
Company employees, administers and grants awards under stock option and other
compensation plans, and recommends to the Board the adoption of retirement and
other employee benefit plans. The Compensation Committee held one meeting in
fiscal year 1995. The Board of Directors has not designated a nominating
committee.
DIRECTORS' COMPENSATION
For the fiscal year ended August 31, 1995, the Company paid non-employee
Directors fees at the rate of $14,000 per annum. In addition, the Company paid
such Directors a fee of $3,000 per year for service on committees of the Board
of Directors. Mr. Halpin serves on the Audit, Compensation and Petroleum
Committees. Mr. Heckman serves on the Audit and Compensation Committees. The
Company also pays a fee of $1,000 per day, other than a day on which the Board
meets, for those days spent by a non-employee Director on the business of any
committee in excess of one day per year with respect to the Compensation
Committee and three days per year with respect to the Audit and Petroleum
Committees. The Company also reimburses ordinary out-of-pocket expenses for
attending Board and Committee meetings.
The 1995 Long-Term Incentive Plan which is being submitted for approval by
the stockholders at the Annual Meeting provides for automatic option grants to
non-employee Directors. See "Approval of the 1995 Long-Term Compensation
Plan--Automatic Grants to Non-Employee Directors."
Halpin Energy Resources, Ltd., which is controlled by Mr.Halpin, was paid
$20,500 for consulting services in the area of petroleum projects provided to
the Company in fiscal 1995, including $7,500 for services provided after Mr.
Halpin was elected a director.
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows all compensation paid or accrued by the Company
and its subsidiaries during the ten month period ended August 31, 1994 and the
fiscal year ended August 31, 1995 to certain executive officers of the Company
(the "Named Officers").
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------- ------------
Name and Securities All Other
Principal Other Annual Underlying Compensation
Position Year Salary ($) Bonus ($) Compensation ($) Options (#) ($)
--------------- ---- ---------- --------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Oistein Nyberg 1995 113,246 0 24,199 0 6,125(7)
(1) 1994 0 0 0 44,000(6) 0
Nils N. Trulsvik 1995 147,754 0 0 0 6,344(7)
(2) 1994 0 0 0 60,000(6) 0
Eugene J. Meyers 1995 141,667 50,000 0 66,667 7,063(7)
(3) 1994 150,000 0 0 0 0
Arnfin Haavik 1995 92,685 0 24,234 0 6,279(7)
(4) 1994 0 0 0 36,000(6) 0
Gary J. Plisga 1995 104,777 0 0 0 6,556(7)
(5)
</TABLE>
- ---------------------
(1) Mr. Nyberg was elected President/Chief Executive Officer effective March
9, 1995. Other annual compensation paid in fiscal 1995 includes $11,899 as
a housing allowance and $7,738 for childrens' school fees.
(2) Mr. Trulsvik served as Executive Vice President from September 8, 1994 to
November 21, 1994; as President/Chief Executive Officer from November 21,
1994 to March 9, 1995; and as Executive Vice President since March 9,
1995. Mr. Trulsvik's salary in fiscal 1995 includes $33,722 as the value
of 10,900 shares of Common Stock received in lieu of cash compensation.
(3) Mr. Meyers served as Chairman of the Board from January 3, 1994 until
November 14, 1995 and as Chief Executive Officer from August 16, 1994 to
November 21, 1994.
(4) Mr. Haavik was elected Executive Vice President/Chief Financial Officer on
February 1, 1995. Other annual compensation paid in fiscal 1995 includes
$20,505 as a housing allowance.
(5) Mr. Plisga was elected Executive Vice President, Americas on January 16,
1995. Mr. Plisga's salary in fiscal 1995 includes $25,610 paid for
consulting services provided by him before his employment by the Company.
(6) These options expire August 16, 1999 and are exercisable only while the
holder renders services to the Company as an officer, director, employee,
consultant or advisor or within six months after the holder ceases to
render such services.
(7) Represents the Company's contributions or accruals to retirement/pension
plans.
4
<PAGE>
FISCAL YEAR END OPTION VALUES
Shown below is information regarding the value of unexercised stock purchase
warrants and options issued as compensation (referred to as "options" in the
following table) held by the Named Officers as of August 31, 1995.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options Held In-the-Money Options
at Fiscal Year End at Fiscal Year End (1)
Name ------------------------- -------------------------
---- Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Oistein Nyberg 44,000 0 $195,250 $ 0
Eugene J. Meyers 66,667 0 295,834 0
Nils N. Trulsvik 60,000 0 266,250 0
Arnfin Haavik 36,000 0 159,750 0
Gary J. Plisga 0 0 0 0
</TABLE>
- ---------------------
(1) Represents the difference between the market value on August 31, 1995 and
the exercise price.
EMPLOYMENT CONTRACTS
The Company has entered into Employment Contracts with each of Oistein
Nyberg, Nils Trulsvik, Arnfin Haavik and Gary Plisga which may be terminated
by either party on six months written notice. The contracts provide for an
annual salary of $150,000 which is subject to renegotiation at the end of each
fiscal year. In addition, beginning April 1, 1995, each person receives an
allowance equal to 12.5% of his base salary, a portion of which is used to
provide minimum life and disability insurance coverage for each such person.
The remainder of such allowance may be used by each person for additional
life, medical or accident insurance and to fund pension/retirement plans. The
Company reserves the right to review the 12.5% allowance every three years.
Each person is also entitled to receive a full year's salary in the event he
is unable to provide services due to sickness or injury.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 14, 1995 with
respect to beneficial ownership of the Company's Common Stock by each person
known by the Company to be the beneficial owner of more than 5% of the
Company's stock, by each director and Named Officer of the Company and by all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner* Beneficial Ownership Percent of Class
------------------------- -------------------- ----------------
<S> <C> <C>
John M. and Renee A. Liviakis(1) 824,000 7.61%
Liviakis Financial Communications,
Inc.
2118 "P" Street, Suite C
Sacramento, California 95816
Tom Landry, Jr. 552,440(2) 5.10%
8411 Preston Road, Suite 720 LB3
Dallas, Texas 75225
Eugene J. Meyers 527,728(3) 4.84%
Nils N. Trulsvik 202,900(4) 1.85%
Einar Bandlien 179,968(5) 1.65%
Oistein Nyberg 176,000(6) 1.61%
Arnfin Haavik 168,000(7) 1.54%
Stanley D. Heckman 100,793(8) **
Robert A. Halpin 12,000(9) **
Gary J. Plisga 8,300 **
All executive officers and directors 1,710,850(10) 14.95%
as a group (10 persons)
</TABLE>
- ---------------------
*Includes addresses of beneficial owners of 5% or more of the Common Stock.
**Less than 1%.
(1) John M. and Renee A. Liviakis, husband and wife, are the sole
stockholders and principal officers of Liviakis Financial Communications,
Inc., which is the record owner of the shares listed.
(2) Includes 123,200 shares owned of record by Touchdown Corporation, of
which Mr. Landry is a control person; 264,481 shares owned of record by
the CNW Irrevocable Trust dated September 10, 1991, of which Mr. Landry
is Trustee; and 48,000 shares owned of record by the CNW Irrevocable
Trust II dated December 11, 1991, of which Mr. Landry is Trustee.
(3) Includes 66,667 shares underlying presently exercisable warrants.
(4) Includes 8,000 shares owned by two sons (as to which beneficial ownership
is disclaimed), 44,000 shares underlying presently exercisable warrants
and 60,000 shares underlying presently exercisable options.
(5) Includes 44,000 shares underlying presently exercisable warrants and
44,000 shares underlying presently exercisable options.
(6) Includes 44,000 shares underlying presently exercisable warrants and
44,000 shares underlying presently exercisable options.
(7) Includes 44,000 shares underlying presently exercisable warrants and
36,000 shares underlying presently exercisable options.
(8) Includes 14,286 shares underlying presently exercisable warrants.
(9) Represents 12,000 shares underlying presently exercisable options.
(10) See Notes 3 through 9; also includes 179,161 issued shares and 156,000
shares underlying currently exercisable warrants and options held by
executive officers not named in the foregoing table.
6
<PAGE>
CERTAIN TRANSACTIONS
On February 27, 1995, the Company paid the principal and accrued interest
due on a $245,000 note payable to certain stockholders of the Company,
including Touchdown Corporation, which is controlled by Tom Landry, Jr., a
more than 5% stockholder and a former President and Director of the Company.
In connection with the repayment, Touchdown Corporation received $75,000 of
principal and $3,250 of accrued interest.
During 1991, the Board of Directors of the Company purported to approve
additional compensation in the amount $75,000 per year to be due Mr. Landry at
the beginning of each of his two years of employment commencing August 1, 1991
with payments to be made on a deferred basis when adequate funds were
determined by the Board of Directors to be available. Unpaid amounts were to
bear interest. This liability had been classified as non-current since 1992 as
the Board of Directors had not identified adequate funds to satisfy such
liability. In addition, various liabilities had been accrued by the Company to
reflect claims by parties affiliated with Mr. Landry. In June 1995, the
Company settled all claims with Mr. Landry and his affiliates by paying
$146,315 and transferring equipment with a net book value of $9,547. Since the
liabilities thus discharged were carried at $195,628, a gain on settlement of
$39,766 was recorded.
On December 20, 1994, the Company entered into a Consulting Agreement with
Liviakis Financial Communications, Inc. ("Liviakis") pursuant to which
Liviakis has undertaken for a two year period to advise and assist the Company
with respect to its corporate finance and financial public relations
activities including performing on behalf of the Company functions generally
associated with corporate investor relations and public relations departments,
disseminating information regarding the Company to the investment community
and preparing materials relating to the Company. For undertaking the
engagement and for its services under the Consulting Agreement, the Company
issued to Liviakis 790,000 shares of Common Stock and is paying Liviakis an
annual fee of $40,000. Liviakis paid $79,000, or par value, to the Company in
connection with the issuance of the shares. The Company's Board of Directors
valued these shares, which were issued without registration under the
Securities Act of 1933, as amended, at 62.5% of the mean between the bid and
asked prices for the Company's Common Stock at the time the Consulting
Agreement was executed, or an aggregate of $1,296,000. The Company is charging
the cost of the consulting services against income over the term of the
Consulting Agreement based upon the expected rate at which effort would be
expended by Liviakis over such term in connection with this engagement. During
the fiscal year ended August 31, 1995, $1,134,875 was charged against income
with respect to the Consulting Agreement.
AMENDMENT TO CERTIFICATE OF INCORPORATION
The Company's Board of Directors has unanimously adopted resolutions to
amend the Company's Certificate of Incorporation, subject to stockholder
approval, to increase the number of authorized shares of Common Stock from
25,000,000 shares to 50,000,000 shares, declaring the advisability of such an
amendment, and directing that the proposed amendment be considered at the
Annual Meeting of Stockholders. The resolution setting forth the text of the
proposed amendment is as follows:
RESOLVED, that paragraph (a) of Article Fourth of this Corporation's
Certificate of Incorporation be amended to read in its entirety as follows:
(a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is fifty-five million
(55,000,000), consisting of:
(1) Five million (5,000,000) shares of Preferred Stock, par value ten
cents ($.10) per share (the "Preferred Stock"); and
(2) Fifty million (50,000,000) shares of Common Stock, par value ten
cents ($.10) per share (the "Common Stock").
7
<PAGE>
If the proposed amendment is adopted by the stockholders, the Company plans
to file a Certificate of Amendment to the Company's Certificate of
Incorporation with the Secretary of State of the State of Delaware promptly
following the Annual Meeting of Stockholders. The amendment will be effective
upon filing. The additional shares of Common Stock would become part of the
existing class of Common Stock, and additional shares, when issued, would have
the same rights and privileges as the shares of Common Stock now issued and
outstanding.
On December 14, 1995, none of the 5,000,000 authorized shares of Preferred
Stock was outstanding, and of the 25,000,000 authorized shares of Common
Stock, 10,834,063 shares were outstanding, 4,927,977 shares were reserved for
issuance upon exercise of outstanding stock purchase warrants, 2,166,500
shares were reserved for issuance upon conversion of up to $7,000,000
principal amount of 8% Convertible Subordinated Debentures due December 31,
1997 that the Company as of the date of this Proxy Statement is offering in
offshore transactions to prospective purchasers who are not U.S. persons,
1,550,000 shares were reserved for issuance upon satisfaction of various
conditions related to the development of oil and gas projects that the Company
is pursuing, 750,000 shares were reserved for issuance in connection with a
pending acquisition of an oil and gas project, 400,000 shares were reserved
for issuance upon exercise of outstanding stock options, and 34,481 shares
were reserved for issuance under the Company's Securities Compensation Plan.
The remaining 4,336,979 shares of authorized Common Stock were neither issued
nor subject to reservation.
The increase in the number of authorized shares of Common Stock is
recommended by the Board of Directors in order to provide a sufficient reserve
of such shares for the future growth and needs of the Company. While except as
otherwise noted herein the Company has no present plans, agreements, or
commitments for the reservation or issuance of additional shares of Common
Stock, the Board believes that the availability of additional shares will
afford the Company greater flexibility in considering possible future
issuances of such shares for various corporate purposes. Such purposes might
include, without limitation, payment of part or all of the consideration
required in connection with the acquisition of interests in oil and gas
properties, on going businesses or other assets; obtaining additional equity
capital to strengthen the Company and permit the expansion or development of
business opportunities; establishment of employee benefit programs to enable
the Company to retain and attract qualified personnel; and satisfaction of
various obligations of the Company.
In the event the stockholders approve the 1995 Long-Term Incentive Plan, as
described later in this Proxy Statement under "Approval of the 1995 Long-Term
Incentive Plan" and the proposed amendment to the Company's Certificate of
Incorporation, the Board of Directors intends to reserve 1,500,000 shares of
Common Stock for issuance under such plan. The Board has not considered
whether it would reserve any shares of Common Stock for issuance under that
plan in the event the stockholders approve the 1995 Long-Term Incentive Plan
but do not approve the proposed amendment to the Certificate of Incorporation.
The Company has estimated that it will require a net cash outlay in the
range of $20,000,000 to $25,000,000 during the fiscal year ending August 31,
1996 in connection with the development of oil and gas projects in which the
Company has or expects to acquire an interest as of the date of this Proxy
Statement and anticipates financing at least a portion of the development
costs of such projects through the issuance of shares of Common Stock or
securities convertible into such shares. As of the date of this Proxy
Statement, the Company is offering in offshore transactions to prospective
purchasers who are not U.S. persons up to $7,000,000 principal amount of 8%
Convertible Subordinated Debentures due December 31, 1997 (the "Proposed
Debentures"). The Proposed Debentures would be convertible into Common Stock
at a price which is 82 1/2% of the average closing price on the five trading
days preceding the date of conversion, and 30,950 shares of Common Stock are
to be reserved for the conversion of each $100,000 principal amount of the
Proposed Debentures. None of the Proposed Debentures would be convertible
until forty-five days after the completion of the
8
<PAGE>
distribution of the Proposed Debentures, and the Proposed Debentures would not
be fully convertible until one hundred ten days after such distribution is
completed. No assurances can be given that the Proposed Debentures will be
issued and sold. Although the Company has some flexibility in postponing or
reducing cash outlays by revising project programs or delaying specific
actions, a limitation on the availability of authorized but unissued and
unreserved shares of Common Stock could seriously impair the Company's ability
to pursue its projects effectively. Even if the Proposed Debentures are issued
and sold to the full extent of the $7,000,000 principal amount being offered,
the Company believes that it will be required to seek additional financing in
the foreseeable future. The Company has also utilized shares of Common Stock
as the principal form of consideration provided in the transactions through
which it has acquired its principal oil and gas projects and anticipates the
continued use of shares of Common Stock for that purpose. In that regard, as
of the date of this Proxy Statement the Company anticipates the reservation of
an additional 250,000 shares of Common Stock for possible issuance in
connection with a pending acquisition of an oil and gas project. A limitation
on the availability of authorized but unissued and unreserved shares of Common
Stock could also seriously impair the Company's ability to acquire additional
oil and gas projects and properties.
Any issuance of additional shares of Common Stock would be in the discretion
of the Board, as it has the authority to determine, subject to applicable law
and Nasdaq Stock Market regulations (which require stockholder approval for
the issuance of shares in certain circumstances), whether, when and on what
terms to issue shares of Common Stock. The additional shares will thus be
available for issuance from time to time without further action by the
stockholders, thereby enabling the Company to avoid the delays and expenses
attendant to obtaining further stockholder approval and providing the Company
with the flexibility needed to act promptly when business opportunities or
propitious market conditions for financing present themselves. The additional
shares of Common Stock may be issued without first offering such shares to the
stockholders, since stockholders do not have preemptive rights with respect to
the Common Stock. Except where shares are issued on a pro-rata basis to all
stockholders (such as in a stock dividend or stock split), the issuance of
additional shares of Common Stock, including issuances upon conversion of
securities convertible into Common Stock, would reduce the proportionate
ownership interests in the Company held by current stockholders.
The availability for issuance of additional shares of Common Stock could
enable the Board of Directors to render more difficult or discourage an
attempt to obtain control of the Company. For example, the issuance of shares
of Common Stock in a public or private sale, merger or similar transaction
would increase the number of outstanding shares, thereby diluting the
proportionate ownership interest of a party interested in obtaining control of
the Company. This effect would be particularly pronounced if the shares were
issued to a party or parties supportive of the then current management. The
Company is not aware of anyone seeking to accumulate Common Stock or obtain
control of the Company and has no present intention to use additional
authorized shares to deter a change in control.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote thereon is required for the adoption of the
proposed amendment to the Company's Certificate of Incorporation. Abstentions
and broker non-votes have the effect of a vote against the proposal.
The Board unanimously recommends a vote FOR the proposal to amend the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock.
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APPROVAL OF THE 1995 LONG-TERM INCENTIVE PLAN
The Board of Directors has determined that it is advisable and in the best
interest in the Company and its stockholders to provide incentive for the
encouragement of the highest level of performance by selected employees,
directors, consultants and advisors of the Company and its subsidiaries by
enabling such persons to acquire a proprietary interest in the Company by
ownership of its stock through the exercise of stock options and stock
appreciation rights. Accordingly, the Board of Directors has approved the 1995
Long-Term Incentive Plan (the "Plan"), subject to stockholder approval at the
Annual Meeting, pursuant to which up to 1,500,000 shares of Common Stock may
be issued upon the exercise of stock options and stock appreciation rights
granted to eligible participants. The following summary of the principal
provisions of the Plan is subject to the full text thereof. A copy of the Plan
may be obtained from the Company by any stockholder upon written request.
PURPOSE OF THE PLAN
The purpose of the Plan is to further the interests of the Company by
enabling employees, directors, consultants and advisors of the Company and its
subsidiaries, upon whose judgment, initiative and effort the Company is
dependent, to acquire a proprietary interest in the Company by ownership of
its stock through the exercise of stock options and stock appreciation rights
("Awards") granted under the Plan. The Company believes that the Plan will
enable it to attract and retain participants' services and motivate
participants to increase the Company's value, and that the Plan will provide
the Company with flexibility in compensating such participants.
SECURITIES SUBJECT TO THE PLAN
The Plan authorizes the issuance of up to 1,500,000 shares of the Company's
Common Stock in connection with Awards granted under the Plan. In the event of
any change in the number of outstanding shares of the Common Stock by reason
of recapitalization, reclassification, stock dividend, stock split, or
combination of shares or other similar transactions, appropriate and
proportionate adjustment will be made in the number of shares to which the
Plan and outstanding Awards relate and the exercise price of Awards.
ADMINISTRATION
The Plan may be administered either by the Board of Directors or by a
Committee consisting of at least two directors appointed by the Board of
Directors who are "disinterested persons" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended. As used herein, the
term "Committee" includes the Board of Directors if it is then administering
the Plan. The Committee has full authority, subject to the provisions of the
Plan, to grant Awards, to designate the recipients of Awards and terms of the
Awards, to establish rules and regulations which it may deem appropriate for
the proper administration of the Plan, and to interpret and make
determinations under the Plan. Members of the Committee serve at the
discretion of the Board.
ELIGIBILITY
Awards may be granted to persons who are employees, directors, consultants
and advisors of the Company or any subsidiary of the Company, provided that
non-employee directors of the Company are only eligible to receive non-
discretionary automatic option grants as described below under "Automatic
Option Grants to Non-Employee Directors." The terms "consultant" and "advisor"
are not defined in the Plan. While such terms are generally considered to
refer to persons who render services or advice in a capacity other than as an
employee, it will be the responsibility of the Committee to construe and
interpret such terms on a case by case basis. Awards are not transferable or
assignable other than by will or by the laws of descent and distribution.
At January 2, 1996, the Company had 21 employees and six directors
(including three non-employee directors) who were eligible to receive Awards
under the Plan. The Company also, from time to time, retains various
consultants and advisors who would be eligible to receive Awards under the
Plan.
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TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan may be either incentive stock options
("Incentive Options") under Section 422 of the Internal Revenue Code of 1986
(the "Code") or non-qualified stock options ("Non-qualified Options").
Incentive Options may be granted only to persons who are employees of the
Company or any subsidiary of the Company.
Options granted under the Plan expire on such date as is determined by the
Committee, unless earlier terminated as provided in the Plan; provided,
however, that Incentive Options may expire no later than ten years after the
grant date (five years with respect to optionees who are more than ten percent
stockholders of the Company) and options granted pursuant to a Sub-Plan for
persons who are domiciled in the United Kingdom and subject to taxation
therein may expire no later than seven years from the date of grant.
An option is exercisable at such times as are determined by the Committee on
the grant date. The purchase price for shares to be issued upon exercise of an
option is determined by the Committee at the time of grant, but with respect
to an Incentive Option such price may not be less than 100% of the fair market
value (as defined in the Plan) of the Common Stock on the grant date (110% of
the fair market value with respect to optionees who are more than ten percent
stockholders of the Company).
If the aggregate fair market value (determined at the time the Incentive
Option is granted) of Common Stock for which Incentive Options (whether
granted under the Plan or any other plan of the Company) are exercisable for
the first time during any calendar year exceeds $100,000, the amount of such
excess will be treated as Non-qualified Options.
The exercise price of an option is payable in full at the time of delivery
of the shares, in cash or, at the option of the Committee, in shares of the
Company's Common Stock, by full recourse promissory note, or by waiver of
compensation due or accrued for services rendered. The use of Common Stock as
payment for the exercise of an option also enables an optionee to "pyramid"
his options; that is, to apply automatically the shares received upon the
exercise of a portion of an option to satisfy the exercise price for
additional portions of the option. The effect of pyramiding is to allow an
optionee to deliver a relatively small number of shares in satisfaction of the
exercise price of a greater number of shares under the option. Any promissory
note delivered in payment for the exercise price of an option must provide for
interest at a rate sufficient to avoid imputation of income under the Code and
will contain such other terms and conditions as the Committee deems
appropriate, provided that promissory notes of non-employees must be
adequately secured by collateral other than the shares purchased.
If an optionee ceases to be an employee, director, consultant or advisor for
any reason other than death, permanent disability (as defined in the Plan) or
termination for cause (as defined in the Plan), the option expires on the
earlier of no later than three months from the date of termination of
employment or expiration of the term of the option. Upon the death or
permanent disability of an optionee while an employee, director, consultant or
advisor, the option expires on the earlier of no later than one year from the
date of death or permanent disability or expiration of the term of the option.
If an optionee's relationship with the Company is terminated for cause, the
option expires on the date of such termination. During the period between
termination of the optionee's relationship and expiration of the option, the
option may be exercised only to the extent that it was exercisable on the date
of such termination. The foregoing provisions regarding early expiration of
options upon termination of an optionee's relationship with the Company may be
varied by the Committee with respect to Non-qualified Options.
These and other terms and conditions of the options will be set forth in an
agreement to be entered into between the Company and the optionee at the time
an option is granted.
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AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS
Non-employee directors of the Company are ineligible to receive Awards under
the Plan except pursuant to a Sub-Plan which provides for automatic grants of
Non-qualified Options to non-employee directors. Pursuant to the Sub-Plan, a
Non-qualified Option to purchase 7,500 shares of Common Stock will be granted
automatically to each non-employee director on each of (i) the date of each
Meeting of Stockholders at which a non-employee is elected or re-elected as a
director and (ii) the date a non-employee is first elected as a director, if
not at a Meeting of Stockholders. In addition, a non-employee director will be
automatically granted a Non-qualified Option to purchase 7,500 shares of
Common Stock on each date on which such non-employee director is elected or
re-elected by the Board of Directors as Chairman of the Board of Directors.
The exercise price of each option must be equal to 100% of the fair market
value of the Common Stock on the date the option is granted. Each option is
100% vested six months after the date of grant. Options expire on the first to
occur of three years from the date of grant or the first anniversary of the
date the director ceases to be a director for any reason. The Sub-Plan is
administered by the Board of Directors. Except as specifically set forth in
the Sub-Plan, the options will be subject to the terms and conditions of the
Plan applicable to Non-qualified Options.
Currently, Robert A. Halpin, Stanley D. Heckman and Eugene J. Meyers are
eligible to participate in the Sub-Plan. If the Sub-Plan had been in effect
during the last fiscal year, each of Messrs. Halpin and Heckman would have
received options for 7,500 shares at an exercise price of $5.8125 per share
when they were first elected directors on March 4, 1995.
STOCK APPRECIATION RIGHTS
A stock appreciation right ("SAR") entitles the holder to receive a payment
in cash and/or Common Stock, in the Committee's discretion, equal in value to
the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price of the SAR. The Committee establishes the
exercise price and vesting schedule of the SAR at the date of grant. Unless
otherwise specifically provided in a participant's agreement, an SAR expires
on the first to occur of (i) the tenth anniversary of the date the SAR was
granted; (ii) 30 days (subject to extension) after the holder ceases to be an
employee, director, consultant or advisor for any reason other than death,
permanent disability or termination for cause; (iii) six months (subject to
extension) after the holder ceases to be an employee, director, consultant or
advisor by reason of death or permanent disability; and (iv) the date a holder
is terminated as an employee, director, consultant or advisor for cause (as
defined in the Plan). During the period between termination of the holder's
relationship with the Company and expiration of the SAR, the SAR may only be
exercised to the extent that it was vested on the date of such termination.
RESTRICTED STOCK
As a means of enabling a participant to commence his holding period under
Rule 144 of the Securities Act of 1933, as amended, with respect to shares of
Common Stock subject to an Award which have not been registered under such
Act, the Committee may, in its sole discretion, permit a participant to
exercise a non-vested portion of an Award and receive shares of restricted
stock upon such exercise which will vest at the same rate as provided in the
Award which was exercised. If any Award so exercised expires without becoming
fully vested, any restricted stock issued which has not vested must be
returned to the Company in exchange for a payment in cash or stock by the
Company equal to the exercise price paid for such restricted shares, subject
to any legal requirements relating to a corporation's ability to repurchase
its securities.
DURATION AND MODIFICATION OF THE PLAN AND AWARDS
No Awards may be granted under the Plan after November 13, 2005; provided,
however, that the Board of Directors is empowered to terminate the granting of
Awards under the Plan at an earlier date or to amend, extend or otherwise
modify the Plan; and provided further that except for adjustments
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made necessary by changes in the Company's Common Stock, the Board of
Directors may not, without stockholder approval, increase the total number of
shares issuable under the Plan or change the designation of the class of
persons eligible to receive Incentive Options.
The Committee may modify or amend the terms of outstanding Awards, including
a change of the exercise price or acceleration of the vesting of the Award,
and it may exchange, cancel or substitute Awards, subject to the consent of
the holder of the Award.
In the event of the Company's liquidation or dissolution, or upon any merger
or consolidation in which the Company is not the survivor, the sale or lease
of all or substantially all of the business assets of the Company, or the sale
of more than 80% of the then outstanding Common Stock of the Company to
another corporation or entity, each outstanding Award will terminate on the
date of such transaction, subject to the Committee's authority, in its sole
discretion, to accelerate the vesting of outstanding Awards or to give advance
notice of such event to Plan participants, unless the surviving or acquiring
corporation or entity agrees to assume outstanding Awards.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain significant United States
federal income tax consequences of the Plan based on currently applicable
provisions of the Code and the regulations promulgated thereunder.
INCENTIVE OPTIONS. No income is recognized by an optionee at the time an
Incentive Option is granted, and no income is recognized by an optionee upon
his exercise of the option (although the difference between the fair market
value of the shares on the date of exercise and the option price is an item of
tax preference for purposes of the alternative minimum tax). If the optionee
makes no disposition of the shares received upon exercise of the option within
two years from the date the option was granted and one year from the date the
shares were issued to him upon exercise of the option, he will recognize
capital gain or loss when he disposes of his shares. Such gain or loss will be
long-term and will be measured by the difference between the option price and
the amount received for the shares at the time of disposition.
If the optionee disposes of shares acquired upon exercise of an Incentive
Option before the expiration of the applicable holding periods, any gain
recognized from such disqualifying disposition will be taxable as ordinary
income in the year of disposition generally to the extent of the amount by
which the lesser of the fair market value of the shares on the date the option
was exercised and the amount realized upon such disposition exceeds the option
price. Any additional gain recognized upon such a disposition will be treated
as long-term or short-term capital gain, depending upon whether the shares
have been held for more than one year.
According to proposed Treasury regulations, in general, no gain or loss will
be recognized by an optionee who uses shares of stock to exercise an Incentive
Option. A number of new shares of stock acquired equal to the number of shares
surrendered will have a basis and holding period equal to those of the shares
surrendered. To the extent new shares of stock acquired pursuant to the
exercise of the option exceed the number of shares of stock surrendered, such
additional shares will have a zero basis and will have a holding period
beginning on the date the option is exercised. Any disqualifying disposition
of stock acquired through the surrender of other shares of stock will be
deemed to be a disposition of the stock with the lowest basis first.
The use of stock acquired through exercise of an Incentive Option to
exercise an Incentive Option will constitute a disqualifying disposition with
respect to such stock if the applicable holding period requirement has not
been satisfied. This provision is intended to prevent the "pyramiding" of
Incentive Options.
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NON-QUALIFIED OPTIONS. An optionee recognizes no income at the time a Non-
qualified Option is granted under the Plan. At the time of exercise of a Non-
qualified Option, the optionee will recognize ordinary income in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price; provided, however, that if an optionee who
is subject to the provisions of Section 16(b) ("Section 16(b)") of the
Securities Exchange Act of 1934 (an executive officer, director or 10%
shareholder) exercises a Non-qualified Option within six months of the date of
grant, such optionee will recognize ordinary income based on the fair market
value of the shares on the date which is six months after the date of grant
unless he makes an election under Section 83(b) of the Code ("83(b) election")
to recognize income based on such value on the date of exercise.
An optionee will recognize gain or loss on the subsequent sale of shares
acquired upon exercise of a Non-qualified Option in an amount equal to the
difference between the amount realized and the tax basis of such shares, which
will equal the option price paid plus the amount included in the employee's
income by reason of the exercise of the option; provided, however, that if the
optionee is subject to Section 16(b) and sells shares received upon exercise
of a Non-qualified Option within six months of the date of grant, such
optionee will recognize ordinary income based on the fair market value of the
shares on the date which is six months after the date of grant unless he makes
an 83(b) election to recognize income on the date the shares were sold.
Provided such shares are held as a capital asset, such gain or loss will be
long-term or short-term capital gain or loss depending upon whether the shares
have been held for more than one year.
No gain or loss will be recognized by an optionee who uses shares of stock
to exercise a Non-qualified Option. A number of the shares acquired equal to
the number of shares surrendered will have a tax basis and holding period
equal to those of the shares surrendered. The optionee will recognize ordinary
income in an amount equal to the fair market value of the additional shares
acquired at the time of exercise (or, if the optionee is subject to Section
16(b) and exercises the option within six months of the date of grant, on the
date which is six months after the date of grant unless the optionee makes an
83(b) election to recognize income at the date of exercise). Such additional
shares will be deemed to have been acquired on such date and will have a tax
basis equal to their fair market value on such date.
STOCK APPRECIATION RIGHTS. A holder recognizes no income at the time an SAR
is granted under the Plan. In the case of an SAR settled in cash, when the SAR
is exercised the holder will recognize ordinary income in an amount equal to
the cash received. Alternatively, in the case of an SAR settled in shares of
Common Stock, the holder will recognize ordinary income in an amount equal to
the fair market value of the shares acquired at the time of exercise (or, if
the recipient is subject to Section 16(b) and exercises the SAR within six
months of the date of grant, on the date which is six months after the date of
grant unless the holder makes an 83(b) election to recognize income at the
date of exercise). Such shares will be deemed to have been acquired on such
date and will have a tax basis equal to their fair market value on such date.
RESTRICTED STOCK. In the case of an exercise of an Award payable in
restricted shares of Common Stock, generally the recipient will recognize
ordinary income in an amount equal to the excess of the fair market value of
the shares on the date the shares are freely tradable and no longer subject to
a substantial risk of forfeiture over the amount paid for such shares, if any,
unless the recipient makes an 83(b) election to recognize income at the date
of exercise. Such shares will be deemed to have been acquired on such date and
will have a tax basis equal to their fair market value on such date.
COMPANY TAX DEDUCTIONS. In the case of Incentive Options, the Company will
not be allowed a deduction for federal income tax purposes at the time an
Incentive Option is granted or exercised. At the time of a disqualifying
disposition by an optionee of shares received pursuant to the exercise of an
Incentive Option, the Company will be entitled to a deduction to the extent
that the optionee recognizes ordinary income as a result of such disposition.
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In the case of Non-qualified Options or SARs, the Company will be entitled
to a deduction for federal income tax purposes in the same amount as the
individual recognizes ordinary income in connection with the exercise of a
Non-qualified Option or SAR. In the case of an Award payable in restricted
stock, the Company will be entitled to a deduction for federal income tax
purposes in the same amount as the individual recognizes ordinary income in
connection with the receipt of the restricted stock.
The Company's deduction described above is subject to the individual's
corresponding income being "reasonable compensation" for purposes of
deductions under the Code.
The Company has the right to withhold sums required by federal, state,
and/or local tax laws to be withheld with respect to the exercise of any Non-
qualified Option or SAR from sums owing to the individual exercising such
Award or, in the alternative, may require the individual exercising the Award
to pay such sums to the Company prior to or in connection with such exercise.
The Committee, in its sole discretion, may allow a participant to satisfy such
tax withholding obligations by withholding from the shares receivable upon the
exercise of a Non-qualified Option or SAR settled in shares a number of shares
having an aggregate fair market value equal to the amount to be withheld.
Code Section 162(m), enacted in 1993, precludes a public corporation from
taking a deduction in 1994 and subsequent years for compensation in excess of
$1 million for its chief executive officer or any of its other four highest
paid officers. Based on the current market price of the Company's Common
Stock, the Company does not believe that any compensation derived from the
exercise of Awards granted under the Plan, together with other compensation
paid to the Company's executive officers, will exceed $1 million in any year
for each such officer. If, however, it appears that such limit could be
exceeded at any time in the future, the Company's Board of Directors will
determine what action, if any, at that time would be appropriate in light of
Section 162(m).
VOTE REQUIRED
The affirmative vote of a majority of the shares represented and entitled to
vote at the Meeting is necessary for the approval of the Plan. Abstentions are
counted in tabulations of the votes cast and therefore have the effect of a
vote against the proposal, whereas broker non-votes are not counted and have
no effect on the vote.
The Board unanimously recommends that the stockholders vote FOR approval of
the Plan.
RATIFICATION OF SELECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS
At the recommendation of the Audit Committee, the Board of Directors has
selected Coopers & Lybrand L.L.P., independent public accountants, to audit
the financial statements of the Company for the year ending August 31, 1996
and to perform other appropriate services. Coopers & Lybrand L.L.P. audited
the Company's financial statements for the fiscal year ended August 31, 1995.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at the
meeting, with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of such selection.
In the event of a negative vote on such ratification, the Board of Directors
will select another firm of independent accountants. This proposal requires
for approval the affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote. Abstentions have the effect of a vote
against the proposal and broker non-votes have no effect on the vote.
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Due to the expansion of the Company's business to include the acquisition of
oil and gas properties in various countries, the Board of Directors determined
on September 8, 1994 that it would be appropriate to engage an accounting firm
with worldwide capabilities and, accordingly, dismissed Cross and Robinson as
the Company's principal accounting firm. Cross and Robinson had been the
Company's principal accounting firm for the fiscal years ended October 31,
1993 and 1992. On September 13, 1994, the Company engaged Coopers & Lybrand
L.L.P. as its principal accounting firm.
In connection with the audits of the two fiscal years ended October 31, 1993
and the subsequent interim period through September 8, 1994, there were no
disagreements with Cross and Robinson on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to their satisfaction, would have caused
Cross and Robinson to make reference in connection with their opinion to the
subject matter of the disagreement.
Except for an explanatory paragraph describing an uncertainty about the
Company's ability to continue as a going concern, the audit reports of Cross
and Robinson on the Company's financial statements as of and for the years
ended October 31, 1993 and 1992 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.
STOCKHOLDER PROPOSALS
Any stockholder intending to submit to the Company a proposal for inclusion
in the Company's Proxy Statement and proxy for the 1997 Annual Meeting must
submit such proposal so that it is received by the Company no later than
September 14, 1996.
ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB for the year ended
August 31, 1995 as filed with the Securities and Exchange Commission may be
obtained without charge by writing to: Corporate Secretary, Fountain Oil
Incorporated, 1400 Broadfield Boulevard, Suite 200, Houston, Texas 77084.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Stockholders calls for the transaction
of such other business as may properly come before the meeting, the Board of
Directors has no knowledge of any matters to be presented for action by the
stockholders other than as set forth above. The enclosed proxy gives
discretionary authority, however, in the event any additional matters should
be presented.
SUSAN E. PALMER
Secretary
January 8, 1996
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FOUNTAIN OIL INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 12, 1996
The undersigned hereby constitutes and appoints ROBERT A. HALPIN, OISTEIN
NYBERG and NILS N. TRULSVIK, and each of them, the attorneys and proxies of the
undersigned with full power of substitution to appear and to vote all of the
shares of Common Stock of Fountain Oil Incorporated held of record by the
undersigned on December 14, 1995 at the Annual Meeting of Stockholders to be
held on February 12, 1996, or any adjournment thereof, as designated below:
(1) ELECTION OF [_] FOR all nominees [_] WITHHOLD AUTHORITY
DIRECTORS: (except as indicated to vote for all nominees
to the contrary below) listed below
Einar Bandlien, Robert A. Halpin, Stanley D. Heckman, Eugene J. Meyers, Oistein
Nyberg, Nils N. Trulsvik
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
(2) To approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 25,000,000 to
50,000,000 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) To approve the 1995 Long-Term Incentive Plan which provides for the
issuance of up to 1,500,000 shares of Common Stock in connection with the
grant of stock options or stock appreciation rights to employees,
directors, consultants and advisors of the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
(4) To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent accounting firm.
[_] FOR [_] AGAINST [_] ABSTAIN
(5) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
(Continued and to be signed on other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FOUNTAIN OIL
INCORPORATED. IF NO VOTE IS INDICATED, THIS PROXY WILL BE VOTED WITH AUTHORITY
FOR THE ELECTION OF THE DIRECTORS AND FOR ALL OTHER PROPOSALS.
YOU ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THIS PROXY IN THE ENVELOPE
PROVIDED. IT IS IMPORTANT FOR YOU TO BE REPRESENTED AT THE MEETING. THE
EXECUTION OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ARE
PRESENT AT THE MEETING.
Dated: , 1996
-----------------------------------
-----------------------------------------------
Signature(s)
-----------------------------------------------
IMPORTANT: Please sign exactly as
your name or names appear on this
proxy, and when signing as an
attorney, executor, administrator,
trustee or guardian, give your full
title as such. If the signatory is a
corporation, sign the full corporate
name by duly authorized officer, or
if a partnership, sign in partnership
name by authorized person.
